Patterns of debt possession among households in Poland – a multi-group latent class approach

In this paper, we evaluated patterns of debt possession among households in Poland by applying multi-group latent class models (MGLCM). Households’ debt was investigated from the perspective of value, motive and source. MGLCM were used to conduct a segmentation of households with respect to debt possession and to determine the factors that influence segment membership. With data from the Social Diagnosis Survey, we checked whether the number of segments at the five selected measurement occasions (2003, 2005, 2007, 2009 and 2011) was constant, and the segments were of equal meaning. The results advocated for (1) segmentation with 10 distinct groups of households in each of the periods and (2) equal meaning of groups at all measurement occasions. Inclusion of households’ socio-economic characteristics improved the overall model fit and enabled decomposition of the total change in the pattern of debt possession between 2003 and 2011. The total effect was decomposed into effects associated with the transition of the Polish credit market and changes in the characteristics of households.